Innovations aren’t always amazing inventions or new products. In many cases, the most powerful innovations are internal, and which affect or transform the way an organization operates. This includes the delicate relationship between a leader and his or her employees.

In order to succeed, a leader and his or her subordinates need to have a mutually beneficial relationship based on respect. Despite the obvious fact that while ultimate power resides with the person who can hire and fire—the leader—it’s the employees who perform all the tasks that make the organization work. The leader who forgets this or abuses his authority very quickly won’t have anyone to lead. In fact, in a robust economy, such as the America in the 20th and 21st centuries, leaders and their organizations have often needed to compete against each other for the best employees.

This competition has been highlighted by statements made by Elon Musk regarding his company’s rivalry with Apple. During an October 2015 interview with German business newspaper Handelsblatt, in commenting about Apple’s efforts to develop a self-driving automobile, Musk wryly observed, “They have hired people we’ve fired.” He then revealed that he and his friends at Tesla jokingly call Apple the “Tesla graveyard,” and said, “If you don’t make it at Tesla, you go work at Apple.” But in both companies’ determination to stay one step ahead of the other, the talent highway goes both ways; in that same year Bloomberg reported that Tesla had hired more workers from Apple than from anyplace else.

Recruiters report that both companies are considered top-notch places to work, creating a hypercompetitive environment where it takes huge incentives to woo top candidates. Because any potential recruit knows that he or she will be entering an ultra-high-pressure business environment, the level of respect shown to them by leaders is absolutely a huge factor.

The Balance Between Leaders and Employees

Whether the business is Tesla, Apple, or the local pizza parlor, there needs to be a set of tradeoffs that keep a sense of parity between management and labor (to use the old 19th century terms).

While leaders have the final say in decision making, subordinates need to know their counsel and front-line experience is valued.

While leaders receive higher compensation, subordinates need to know the path upward is open to them too, and the share of the wealth they’re receiving is fair.

While leaders direct the labor of others, subordinates need to know their talents won’t be misused or wasted on a pointless mission.

This delicate balance needs to extend into every area of the leader-subordinate relationship.

In the continued evolution from top-down hierarchical organizations with their autocratic leaders to matrix organizations with interconnected teams, the innovative model of the servant leader has emerged. This is a leader who sees their primary job as helping their employees do their jobs. Not by literally helping them, but by ensuring the employees have the appropriate tools, training, working conditions, knowledge of the mission, and resources to get the job done and stay ahead of the competition.

In our modern industrial era, the phrase “servant leadership” was coined by Robert K. Greenleaf in “The Servant as Leader,” an essay that he first published in 1970. In that essay, Greenleaf drew a distinction between people who want to begin by leading and people who want to begin by serving. He called the two types “leader-first” and “servant-first.” In his formulation, the person who begins by serving then may evolve into a leader, while the leader-first is constrained by negative psychological motives such as “the need to assuage an unusual power drive or to acquire material possessions.”

“The difference manifests itself in the care taken by the servant-first to make sure that other people’s highest priority needs are being served,” he wrote. “The best test, and difficult to administer, is: Do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? And, what is the effect on the least privileged in society? Will they benefit or at least not be further deprived?“

While the traditional model of the autocratic leader promotes the accumulation and exercise of power by the one at the “top of the pyramid,” the servant-leader places more importance on the growth and well being of their fellow citizens and the communities or organizations to which they belong. Servant leadership turns the corporate power pyramid upside down; instead of the employees working to serve the leader, who alone is guiding the company, the leader exists to serve the employees, who share in guidance responsibility. The servant-leader puts the needs of others first, shares power, and helps people develop and perform as highly as possible.

The key question is this: Which type is more likely to generate massive profits year after year? Which type is more likely to keep his or her organization ahead in an ultra-innovative marketplace? Over and over again, we’re seeing that it’s the servant leader who coaches the winning team.